‘There may be more people looking for work, but that doesn't mean their experience, technical capability, location or salary expectations align with the vacancies employers are trying to fill’
New Zealand's unemployment rate is at an 11-year high, but employers are not finding it any easier to hire. Many jobseekers do not match the roles on offer, and employers who drag out recruitment are losing the candidates who do.
That is the warning from Shannon Barlow, managing director of Auckland recruitment firm Frog Recruitment, as new data shows New Zealanders remain pessimistic about job prospects.
The Westpac-McDermott Miller Employment Confidence Index, released on 22 September 2026, rose 3.2 points to 86.3, but labour market confidence saw only a weak rebound after a record low. A net 60% of respondents said jobs were hard to find.
"The biggest misconception is that high unemployment automatically means there's an abundance of suitable talent," Barlow said. "There may be more people looking for work, but that doesn't mean their experience, technical capability, location or salary expectations align with the vacancies employers are trying to fill."
"We can have high unemployment and skills shortages at the same time. In fact, that's exactly what we've been seeing."
Why hiring remains hard at 5.6% unemployment
Westpac describes the market as "low-fire, low-hire" – few layoffs, but little new hiring. Barlow said the label fits, particularly in corporate functions such as business support, HR and parts of the public sector.
"Businesses have been reluctant to lose good people, but equally reluctant to commit to additional permanent headcount," she said. "There's a perception that with unemployment at 5.6%, recruitment should be relatively straightforward. As a result, some employers are dragging out hiring processes, repeatedly reassessing their requirements or delaying decisions in the expectation that there will always be more candidates available."
She said that approach carries a cost. "Vacancies remain unfilled, existing employees absorb additional workloads, and good candidates move on to other opportunities."
Long-term unemployment and the CV gap
New Zealand's unemployment rate jumped to an 11-year high of 5.6% in the June 2026 quarter, according to Statistics New Zealand (Stats NZ). Of the 166,500 people unemployed (not seasonally adjusted), 19.0% had been out of work for more than a year. Stats NZ labour market spokesperson Abby Johnston said around 8,000 more people were in long-term unemployment than a year earlier.
Barlow said career changers, restructured professionals and young people seeking a first role are among those struggling most. "In this market, someone who's been unemployed for nine months may be no less capable than someone who was made redundant nine weeks ago," she said.
"I'd encourage HR teams to challenge screening criteria that automatically disadvantage people who have been out of work. Focus on transferable skills, achievements, adaptability and the genuine requirements of the role." She also cautioned that automated screening tools can filter out strong applicants whose CVs lack the expected keywords or career path.
What should HR leaders do before hiring picks up?
Westpac expects 5.6% to mark the peak in unemployment for this cycle, with a gradual decline to follow, although Stats NZ data shows New Zealand's filled jobs edged up only slightly in the June 2026 quarter. "Yes, I'm optimistic that we've reached, or are very close to, the peak in unemployment, and I expect we'll see gradual improvement from here," Barlow said.
She said retention should be the priority for HR directors over the next six months, as staff who have stayed put out of caution may not be satisfied. "As the employment market improves and people have more options, organisations may discover that some of the retention they've been taking credit for was actually jobseeker hesitancy."
She advised HR leaders to review their employee value proposition, development pathways and hiring processes now. "The real test of your culture isn't whether employees stayed when they had limited alternatives. It's whether they'll still choose you when they have options."
